Why the NBC/Newscorp Video Venture is a Great Idea

I have no idea what the traffic will be for this new venture if they create a single destination site. I have no idea what the traffic will be for video hosted by the distribution partners they signed up, Yahoo, MSN, AOL and Fox and NBC/Universal sites themselves. Individually they certainly will trail Youtube in traffic. In aggregate, it has a chance to surpass Youtube, but we won’t know this for a long , long time.

Here is what I do know.

1. Because Gootube has chosen to hide behind the DMCA, it can only sell advertising around videos it has a license for. That means their inventory is limited, which in turn limits its ability to try new things and to make big sales. If the core competency of Google is to sell advertising and the foundation for the Youtube acquisition was to invent and deploy new and exciting forms of video advertising, that goal just took a huge hit.

This new venture, if it can launch in the next few months, will hit the ground with more and better content, and more monetization options than Google. Its a unique opportunity to set the rules of how video advertising is sold. Something Google thought they had wrapped up when they bought Youtube.

Whether Newco can live up to Google in terms of performance and innovation is another question, but they are going to have every opportunity to do so. Hiring some folks away at Google for stupid money would seem to make a lot of sense at this point.

2. Youtube’s 10 minute limitation will put it at a disadvantage. Newco’s distributors will have access to full episodes in addition to clips and user generated content beyond 10 minutes. This will give viewers much greater choice and could steal users from Youtube for this reason alone. It may force Google to combine Google Video and Youtube. It also will provide more options and flexibility for advertisers.

3. What may turn out to be the biggest problem created by Newco is the new competition for content from major content owners. Rather than Google walking into meetings as the only kid on the block, Newco can offer an alternative from the mindset of a content provider. It will certainly impact the terms and cost of content for Google. The good news for Google is that it may accelerate their ability to get deals done with people who dont want to partner with Newco for whatever reason

4. If the future of the net is video, where does this put Google Search ? Google Video Search right now plays in a walled garden of indexing and returning results only for Google Video and Youtube. How long will users give them a pass for this ? The distributors of content from Newco all have some level of internet video search, I would expect that they will start making an issue of this in advertising and promotional campaigns…”There are X million number of websites with video on them, Google Video searchs 2 of them…”

This new venture is about so much more than who can get more traffic. It was a very smart strategic move to put significant roadblocks in Google’s path, while paving a way for those involved with Newco to give users and advertisers what they want from Online Video.

But as always, concept is one thing, execution is the bottom line

35 thoughts on “Why the NBC/Newscorp Video Venture is a Great Idea

  1. YouTube could fail, sure. And NBC/News Corp. could fail, too. Someone else will figure it out…so the question really is, at what point do we stop getting television?

    Mike

    Comment by Mike -

  2. Hey Mark,
    Any thoughts on the Chinese youtube clones such as youku or tudou which seem to be enjoying immunity from copyright law? Full movies, full seasons of tv shows, all streaming youtube-style.
    (Actually they\’re quite faster than youtube).

    Here are a few examples I\’ve found:
    http://www.pandapassport.com/china-stolen-media/china-pirated-media-1/

    Comment by Panda Passport -

  3. How about thoughts on \”Joost\” or \”Bittorrent\’s – Entertainment Network\”? These are about to be launched (Joost is in beta) and Bittorrent was launched this February….seems a nice competitive playing field is emerging.

    Comment by Amy -

  4. Everybody and their grandma are trying to create some type of online community to sell advertising. I think about 21 of 25 of Business 2.0\’s Companies to Watch are online advertising related.

    Soon there\’ll be more companies selling advertising then anything else.

    Comment by april -

  5. What if there was a site that allowed students at universities around the word to post self generated content that covered everything from their school\’s athletics teams to cool, new independent, unsigned bands? What if students were given the chance to generate college oriented material that was entertaining but clean, factual and responsible? What if there were no issues with copyrighted material because all the video and music was student generated? For students, by students. Sounds cool right? It is. It\’s called thepalestra.com. It may be the next cool thing on the web. You decide.

    Comment by Dave -

  6. I thought that you might like to see Vidmeter\’s report on copyrighted videos on YouTube:

    http://www.vidmeter.com/i/vidmeter_copyright_report.pdf

    Comment by Bri -

  7. The talks between NBC and News Corp are important to both Viacom and to Google. If Viacom wins the lawsuit, YouTube would be at the mercy of the content providers. If YouTube signs on with NBC and News Corp, YouTube would have good content and leave Viacom with no access to the huge audience that YouTube brings to the table.

    Comment by RandomThoughts -

  8. Several excellent points Mark. The challenge for the new venture is that legacy media has shown a lot of incompetence with respect to online stuff. Can they get this right when even Google seems to be struggling with online video?

    Comment by Joe Duck -

  9. Mark,

    Did you notice that the Sequoia Capital guy who sat on Google\’s board AND Youtube\’s board of directors – Micahel Moritz – two days ago abruptly resigned.

    The rumor is that the Google purchase was nothing more than a huge criminal fraud designed to enrich Sequoia partners. They controlled the board of Youtube after making an 11 million dollar investment, and until late last year they were the single largest shareholder of Google and controlled its board.

    Buy purchasing Youtube for 1.65 billion, Sequoia effectively put 500 million dollars of profit in their pocket for 6 months effort.

    Nobody ever expected the deal to make sense or work. It was all about the payoff.

    This sort of thing happened all the time with dot.coms back in the day.. large public company would buy small private company for vastly inflated price, just days after the public company\’s executive staff made equity investments in the small company.

    All perfectly legal, but completely ripping off existing shareholders. Silicon Valley as usual.

    Comment by googguy -

  10. Mark of course has been calling out YouTubes shortcomings from its very launch. Ultimately, the problem with putting faith in NBCU and News Corps video sharing service is putting faith in NBCU and Newcorps.

    I cant tell you how many times I get called out, by technical colleagues working for tech companies, on why my own company (full disclosure: Viacom employee) doesnt have so and so RSS subscription features, or roll out so and so widget application.

    Its the Engineering dummy!

    Read on here… http://www.sunbulli.com

    Comment by MS -

  11. Competition isn\’t a bad thing and keeps the wheels of innovation rolling which benefits us (the consumer), but it always seems like Microsoft and their chosen partners come to the game late more often than not when trying to compete with an established runaway leader (see Zune vs. iPod). They haven\’t led innovation for quite awhile–they merely take concepts that are brilliant and come out with \”me, too\” products. This is more of that thinking at work, and they only want a piece of the pie so it really doesn\’t threaten YouTube all that much the more you think about it.

    Comment by Management Consultant -

  12. Agreed, It HAS to be a single destination. The networks will still make their advertising dollars, but the cable companies may loose money. This gets back to TV as an expirence…….. I think they would be smart to invest the cash and have high quality programming. It will be interesting to see if it all works.

    Comment by Andy P -

  13. Mark,

    Your fundamental point, that \”Gootube\” is forced to be a free bandwidth video hosting/delivery service, rather than a media company, because due to DMCA they can\’t monetize the content by putting ads around it, is just plain brilliant in its truth. How come nobody else cuts to the heart of it like that?

    But consider this, instead of monetizing the content, they can enable the monetization, with two features for the content uploader

    1) pay-per-view powered by Google Checkout payment services,

    2) ads powered by Google Adsense or whatever video ad solution they have, and again the content owner gets the revenue directly

    In both cases, the content owner gets the revenue directly and Gootube makes money on fees, like Ebay. These fees can be just as high as the profits from licensing content and monetizing it themselves like a media company (higher if you believe the \”long tail\” content has more value than big media properties).

    Plus they can truly claim to be just the service provider and therefore not liable for copyright violations.

    Now throw in a third feature

    3) \”Gootube Pro\” service with no 10-minute limit, where they charge the content owner for bandwidth, a for-pay mass market video content hosting/delivery service, and they can have all the \”big\” content too.

    Why would they try to beat the media companies at their own game when they they have the infrastructure and technology to play a unique and extremely lucrative role as an enabling platform for mass Internet video, for both user-generated content and mainstream media properties?

    When everyone thought search technology was just a commodity piece of a portal, Google succeeded by technological strengths in search. Now with everyone thinking about social media and big media monetization of content, maybe they will go with their strengths as a distributed platform for hosting and delivery of content, payment and advertising services.

    Comment by Nemo Semret -

  14. At the end of the day, increased competition is good. This is going to end up being a fight over content – propietary content that people want to see (The Office, Family Guy, etc.) and user-generated content that people also want to see (Ask a Ninja, Wallstrip). The difference is that the NBC/Fox venture will be the only place to view that content whereas user-generated content does not have to be constrained to YouTube and will become desegregated into various independent communities (tech, finance, home chemistry experiments, etc.)

    Comment by Ayal Rosenthal -

  15. Here\’s a good take on this from Danny Sullivan of Search Engine Land.

    http://searchengineland.com/070323-101753.php

    Comment by Jim Sullivan -

  16. Mark,

    While I share some of your enthusiasm for the Internet Video Revolution to take off, I find that what MSNBC/(Faux)Fox Noise, etc. is doing will not interest some of us. As an indy film maker, I like to watch what others are doing and post some of my videos as well. After reading details of the press release, it sounds as if there will not be any u/l of videos by users. Part of the allure w/ \”The Tube\” is that it\’s just plain folks making videos. There are some very talented indivduals out there creating some great content, but this new Video \”Monster\” won\’t allow for user generated videos, mashups and the like. I don\’t get it? I completely understand about copyright infringment so please don\’t get on your high horse and bash me. Far from it, I create my own content and share it with the world. I have Fair Use and Creative Commons that I use to my advantage. Not all of us are \”Pirates\” you know.🙂

    For the most part, I enjoy watching new and cutting edge material because I\’ve grown weary of the same old, same old. The beauty of \”The Tube\” is that it\’s a form of grassroots organization similar to Craigs List that has one little guy connecting with another little guy. The \”Monster\” will come in and try to become this video jaggernaut but for some of us, it\’s pointless. Don\’t waste your time/money because this behemoth will never fly.

    Not only that, but according to the release, you have to use THEIR video player in order to watch the videos (Shades of 1984) Sorry, but I already have Media Player Classic, WMP (ugh) and QuickTime. Now I need another type of player to view their DRM\’d tripe? Puh-Leeze!

    And I agree w/ Tim who stated that NBC will FORCE us to watch a 30 second ad prior to the video. I\’ll take that bet and up it to $100

    Comment by Matt Morgan -

  17. seriously, where do I even being… ur post is so dependend on assumptions, that it becomes a wrong argument. (and those assumptions are something old media sucked at… understanding the internet.)

    \”This new venture, if it can launch in the next few months, will hit the ground with more and better content, and more monetization options than Google.\”
    -bullshit, u need an audience to monetize. and the internet is not about old media formulas, it is about the USER!!!!!!

    \”Youtube\’s 10 minute limitation will put it at a disadvantage.\” – what 10min. limitation?

    \”It will certainly impact the terms and cost of content for Google\”
    -because Newco has such a commanding and threatening audience base, that it can sway terms in such a way… NO way, not yet anyway.

    \”If the future of the net is video, where does this put Google Search ?\” – Now here is where your true colors come out. YOU HATE GOOGLE FOR BEING GOOGLE. What does this have to do w/Google Search…ohmmm NOTHING. They are completely separate segments of a large pie. This point was so irrelevant and elementry I will not even attempt to re-educate you on things u obviously know.

    \”This new venture is about so much more than who can get more traffic.\” -WRONG. and if that is what old media think, then they already lost. W/out traffic there is no audience, w/out an audience there is no website. period. it is just that simple.

    Comment by echotoall -

  18. I\’m not so sure it such a good idea.. but i do think that the competition will be healthy and in the end, we will be able to chose from a great product… free of course😉

    😉

    Comment by Everyday Weekender -

  19. Google video search sucks. I hate how they only search there own stuff. Yahoo video is 1,000 times better.

    Comment by atlantic city -

  20. From what I understood, this venture will be US-only at first. I expect it will be like that for a long while.

    As I live in Canada, I feel one of the problem this industry is facing on the Internet is their licensing approach across the world. Hollywood has always segmented their releases dates across regions and also deal with multiple partners and different legislations in some countries.

    Since Internet broadcasting is usually not subjected to the same restrictions that television broadcasting is, pure Internet ventures do not subject their users to regional restriction headaches.

    I feel this industry needs to change concerning regional restrictions, but since they have to deal with their current partners of the older distribution economy (broadcasting, DVDs, theaters). I don\’t think it will happen any time soon.

    When they\’ll make their content globally available for everyone, then they\’ll stop being dinosaurs and be up to page with the new economy.

    Here\’s an example of how their Internet activities are disconnected with the reality. It happens that in Canada, we can subscribe through cable to many US channels. So, we watch series on these channels. Then, they advertise additional content on the Web (i.e.: alternate ending, mini-episodes, etc.). Then, we go to play this content on the Web and their geo-IP filters tell us: \”Content restricted to US residents\”. How cool is that? We are paying them. They show us publicity that we watch. How much more do they need from us so we get the same thing in return?

    Comment by Jerome Paradis -

  21. This is a good thing for the market and consumers. Competition will help drive innovation, keeps costs (if there are user costs) down, and help create an overall better product and user experience.

    Comment by maui -

  22. It\’s about monetizing content.

    Maybe not today or tomorrow,but soon.

    As with the Music market, will the Consumer be willing to watch a few ads as a trade for a better product ?

    Consumers have, and will.

    Randy Geider

    Comment by Randy Geider -

  23. Saying that Google is hiding behind the DMCA is ridiculous. They\’re hiding behind the DMCA in so much as they\’re obeying the laws spelled out in the DMCA. That\’s like saying I\’m hiding behind the laws which prohibit the sale of drugs, by not selling drugs.

    This deal might be a good idea, but I really doubt they\’ll be able to resist including all manner of consumer-repellant features. Google offers non-intrusive ads related to the content of the page the user is viewing. That\’s fine because the ads are relevant and, oh yeah, non-intrusive. $50 says NBC will make you watch a 30 second commercial before every clip you try to view.

    Comment by Tim -

  24. First of all; this wont have a central site …

    – Which is putting your product on everyones else bandwidth ..

    – Im sure they will release it with some over protective DRM flash/Ajax/*maybe even ACtive x control –

    – They will get their share of the market; becuase the shear amount of money they are throwing at it ; But the question is what will be there ROI ?

    – This is fun to watch / but I bet stressful as hell for Goog and Fox/NBC –

    – Google has made stupid comments; out of nervousness

    Comment by Pallet Rack -

  25. Marc, you seriously live in fantasy land. This NBC/Newscorp thing is pretty much a joke and here\’s why:

    1) They won\’t post full episodes of anything. If they do, it will be in an inconvenient streaming form because that\’s the only way they can protect their property.

    2) Given #2, if I want full episodes of stuff, I\’ll use something like Democracy player and download the stuff (in glorious HD format no less). Democracy Player and similar tools are completely free and they are about convenience for the consumer — not protecting content. Consequently, guess which one the consumer will go for?

    3) For ALL other forms of content (non-commercial), GooTube is already the clear leader and will forever remain so unless they suddenly start suffering from retardation.

    So, I fail to see any logic in your post or in the formation of this new, doomed to fail, website.

    Comment by Sam -

  26. I just posted a new blog on this. I was VP at Napster and saw the record labels try to build their own site to compete. It failed miserably. The TV and film guys are much smarter.

    There are still big issues to deal with that could kill this idea. The TV and Film guys are incredibly creative when it comes to content…but very conservative and myopic when it comes to business models.

    For more details on what I see as teh major issues see http://dondodge.typepad.com/the_next_big_thing/2007/03/nbc_and_news_co.html

    Don Dodge

    Comment by Don Dodge -

  27. Glad you added that bit about execution, which could be the bottom line of just about every post on every blog, and still wouldn\’t be said enough.

    Most people just don\’t care about all this stuff, they just want to watch something funny or something dramatic, and they don\’t want a lot of hassles. There is NO loyalty.

    So, execution is the bottom line.

    Comment by Scott Yates -

  28. If they use Windows Media anything, this will die momentarily. My mom can use YouTube, she can\’t use nbc.com or abc.com, that is a VERY under-rated benefit.

    Comment by Danny -

  29. As far as I\’m concerned, and from what I\’ve read over the years, competition just makes for a better product down the line, I\’m all for that!🙂

    Comment by Sabrina -

  30. One thing though, there has been little talk of partnering with Cable/ISPs or Cell carriers.

    The QoS for full length episodes needs to be decent else everyone is left with a jerky picture or caching delays. Can this relatively new company build an inrastructure to serve these huge files?

    I think it\’s pretty unlikely, and if it even comes close, the communications industry will be wanting a bigger piece of the action.

    Comment by Adam Cains -

  31. Mark, At first I thought this was a stupid idea. The record labels tried to set up their own music site to compete with Napster and it was a disaster.

    But the video guys are smarter. They will make distribution deals with AOL, Myspace, Yahoo, Microsoft, and others. This will be the key to their success. They maintain ownership and control of the content, but they use AOL, MySpace, Yahoo, and Microsoft sites to get traffic and distribution.

    If they allow creative mashups and chunks of video for \”best of…\” type clips or \”the funniest moments\”, type thing they will do well. Just offering the same video length available on TV will not be very interesting.

    The other key to success will be getting the other TV and Film content owners to allow their content on the site. My guess is they have not signed exclusive deals with GooTube.

    This idea could actually work!

    Don Dodge

    Comment by Don Dodge -

  32. good point taulbee. i hear google bought youtube for a paypal like tech they have developed for purchasing of video. i dont know if its true.

    marx.

    Comment by marx -

  33. key phrases \”in aggregate\” and \”long long time\”
    users prefer to have it on one site rather than 5 or however many more than 1 or 2. People inherently don\’t like change and it will take a long long time for youtube users to change to something they already are familiar with especially if they are not getting anything more that what they already have.

    The networks should pool their content and resources and profit share off of one collaboritive effort to give it a better shot. That\’s unlikely, so in the meantime, youtube will garner more users, stretch out the Viacom suit for years and keep their edge over new competition for by being first.

    I\’m not saying that\’s how it should be, just pointing out that it will take a lot to point the users in another direction. Everyone seems to hate youtube except the millions of users who use it. You\’re right about one thing, execution is key and they better work hard if they a piece of the market.

    Comment by Michael -

  34. Could Google\’s aquisition of YouTube be more related to its play in automating the media buying process for radio / print / TV? They are doing a great job of automating the terrestrial radio ad buying process, and adding in some limited contextual capability for broadcast media.

    Once the model is established in Radio, there\’s no reason they couldn\’t take a very similar approach to automating buying for terrestrial TV as well. The only difference really is in the size of the ad file, video being much larger. YouTube\’s infrastructure and talent pool would be able to quickly solve most of the technical problems that might come up in that arena.

    Comment by Taulbee Jackson -

  35. mark…this is a big deal. i just hope the nets stay true to the idea and dont do anything dumb. forget all the business aspects but from a users pov this is what online video should be. when you put users 1st everything will work itself out. the other question i have is who will lead the jv? that is a huge part of this. they need someone who understands the space and not a product manager.

    marx.

    Comment by marx -

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